From his position as Managing Director Diageo Southern Europe, David Smith has returned to Australia to assume his new position as Managing Director, Lion Australia. He talks about his aspirations for leading Lion Australia’s beer and spirits business into a new post-pandemic era.
As Australia is a market you’re already familiar with, what is your focus for 2022?
I feel energised to be back in the Australian drinks and hospitality industry, one of the very best in the world. It’s been great to get out in the trade in my first few weeks. I am looking forward to working with the great team at Lion to build our brands and the business while creating value for our customers and partners.
The obvious factor we’re all up against is the recovery of the on-premise channel. Draught beer is the lifeblood of venues, and we want to see people back out and enjoying their local venues with family and friends and a cold schooner of XXXX, Furphy or Tooheys. Helping people be social and live well is not only key to our core purpose, it employs tens of thousands of Australians and makes a significant contribution to our economy.
What are Lion’s key opportunities for growth in this market as the on-premise rebuilds and the consumer trends move towards health and wellbeing?
Nothing beats a fresh beer on tap at your local. We are focused on innovating and giving people beer and adult beverages they enjoy, whether that is in the low or no-alcohol space or craft and premium. We are also mindful that our consumers want different drinks for all occasions.
As Lion's first locally-produced alcohol-free beer, the launch of James Squire Zero last year was met with great enthusiasm by consumers. We look forward to sharing more in this space over the year ahead. What is so interesting about the alcohol-free beer market is that it is proving a genuine method by which beer drinkers choose to moderate. Instead of having a couple of full or mid-strength beers, we see them swap out one of those for an alcohol-free option.
Last year, a fantastic innovation to come out of our Vanguard Luxury Spirits business was the Modern Cocktail Company (MoCo), a premium on-tap cocktail made from the best spirits and mixers. It has helped many of our on-premise customers offer a more premium cocktail list without the need for any additional staff training. We know labour shortages are being felt acutely in our sector. It's an excellent example of putting the customers' needs and preferences at the forefront of our innovation.
How does your business address and champion inclusivity and diversity amongst your staff? Can you outline some of your key strategies in this area and give examples of their effectiveness?
Lion has been on this journey for quite some time. Being new to the business but having spent a lot of time in the industry, I have always been impressed by Lion's unwavering focus on its people, culture, and hard work in creating a workplace where people can thrive and succeed.
A significant turning point for Lion was probably closing the gender pay gap in 2017. At the time, it was a $6 million investment to address the pay gap across Lion in like-for-like roles. Lion has been a WGEA Employer of Choice for Gender Equality since 2019.
To back this up, Lion has a target to achieve gender-balanced teams across all parts of the business by 2026. We see this as an achievable but meaningful goal to achieve more diversity.
We have also made several meaningful policy changes. Our parental leave policy, for example, removes 'primary' and 'secondary' carer labels and moves to a model of shared care where we provide the same parental leave provisions (12 weeks' full paid parental leave) for both parents.
At the same time, we increased superannuation payments, now paid up to 18 weeks. At Lion, we already funded 12 weeks of superannuation on the paid portion of parental leave. We pay an extra six weeks of superannuation at the minimum wage. It's an important policy change that tackles the huge discrepancy in superannuation balances between Australian men and women.
We are also pleased to be extending our commitments in this space to our sponsorships. Early this year, Furphy made a major play into the AFLW by ramping up its sponsorships of the Melbourne Demons, St Kilda Saints, Richmond Tigers and Sydney Swans alongside their AFL teams.
It's the first time a major beer club sponsor has matched its sponsorship commitment across AFL and AFLW teams. We believe it will go a long way to support the clubs and raise the profile of AFLW around the country.
Moving beyond gender, in 2020, we launched Pride at Lion – a group dedicated to driving visibility and equality for Lion's LGBTIQ+ community and promoting an inclusive working environment in which all team members can be their best authentic selves.
In February, we announced that Lion will be a major partner of Sydney Gay and Lesbian Mardi Gras in 2022, with Little Creatures the official beer of Mardi Gras for the next three years and Sydney World Pride in 2023.
Is there a role within your business specifically tasked with promoting inclusivity?
We have a fantastic team in People & Culture overseeing our Inclusion and Diversity agenda who have the full support of the entire leadership team. They’re constantly looking for new and innovative ways to achieve a more inclusive and diverse workplace. What we know is that it's up to every one of us to create the kind of inclusive business we all want to work in, so it can’t be a set and forget exercise. It’s about evolving and always aiming to go one step better.
Since adopting an inclusive workplace, How has an inclusive workplace impacted your business, in terms of things like profit, productivity, company culture, staff turnover and talent acquisition.
Diverse teams deliver better innovation, better customer and consumer advocacy and stronger financial performance, so the business case for us is clear.
We track specific D&I measures in our regular 'People Pulse' surveys across Lion, which consistently show us that we are already operating off a high baseline. Pleasingly, we see positive increases against key measures that track whether people feel included at work and diverse perspectives are valued. We also know that having a strong D&I agenda helps us recruit the best talent.
What strategies has your business implemented to lower emissions and achieve carbon neutrality?
Long before Lion achieved its Climate Active accreditation for its Scope 1 and 2 emissions in 2019, its mission has been to reduce overall carbon emissions.
We recently partnered with BevChain to launch NSW’s first electric and carbon-neutral beer truck. It's doing the rounds in metropolitan Sydney delivering kegs from Tooheys. The Tooheys New electric truck is the latest in a suite of carbon reduction initiatives and the first of many to address our Scope 3 emissions, which will help us achieve a net-zero value chain by 2050.
The Tooheys Brewery in Lidcombe, NSW's biggest brewery, became the anchor partner in the world's first industry-scale aggregated Power Purchase Agreement in 2019, pooling its energy needs with participating venues in partnership with the AHA NSW. The result is a win-win-win for publicans, the brewer, and the environment, with power sourced from ENGIE's solar farms across NSW.
At XXXX in Queensland, we proudly harvest the sun to power the iconic brewery in Milton, having installed a significant solar array in 2019, which consists of more than 2,000 solar panels and produces enough electricity to power 150 large homes in Brisbane for a year.
XXXX's state-of-the-art reverse osmosis plant reuses wastewater – enabling the production of XXXX Gold at a ratio of 2.8 litres of water for every litre of beer, which is approaching world-leading levels of efficiency for brewing.
Both the Tooheys and XXXX Breweries also utilise biogas which replaces natural gas and reduces scope 1 emissions.
What strategies has your business implemented to reduce water wastage?
We have wastewater plants at our two biggest breweries – XXXX and Tooheys - which treat wastewater and create biogas from the organic compounds found in the wastewater. The biogas is then used as a biogenic heat source to offset our natural gas usage to boil the wort in the first stage of the brewing process. Interestingly, we decanted large volumes of unused kegs in the first lockdown in 2020, and a lot of this beer went through our wastewater plants and played a part in making the fresh beer for when venues reopened.
What internal changes have you made to reduce environmental harm, such as remote working, promoting recycling, sustainability committees and green commuting?
Lion has evolved its flexible work policy in recent years to ensure people are supported to work in a way that allows them to maintain a good work/life balance and operate effectively as teams. For many, this involves working from home for part of the week, and in many ways, taking flexible working mainstream helped Lion when the pandemic hit because our workforce was already well set up to work remotely.
From an environmental point of view, Lion announced last year it would eliminate plastic shrink wrap from its packaging over the next two years. Since November last year, cans and 6-packs are no longer shrink-wrapped in plastic.
Lion is also the first major brewer in Australia to partner with REDcycle – a national soft plastic recycling initiative – which collects and reuses soft plastics that cannot go into kerbside recycling. We see this as an important partnership as we continue phasing out plastics around bottles.
Are there any new strategies you are planning to implement in this area in the future?
Lion has committed to Net Zero in the Supply Chain by 2050. It will see us tackle Scope 3 carbon emissions in earnest, so this is a massive focus for the business moving forward.